Thursday, March 11, 2010

More on Inter-Generational Politics

In this post, I examined the incentive structure implied by Mark Steyn’s thesis that modern welfare states tend to have dysfunctionally low birth rates. I concluded by observing that, if the thesis holds, “the only solution is more and better social policy.” That got reader Ted S. riled up again in a way that invites me to complete the thought:

“We seem to agree that the "social policy" (I think more honest naming would be "anti-social policy" for all the reasons given in your post, but never mind) of Social Security and Medicare are

So it is strange then that the "solution" to cure this malady should be more of the same ("more and better social policy").”

Actually, it’s only strange if you assume, as it seems that Ted does, that Social Security and Medicare upended an ethically acceptable and welfare-enhancing social equilibrium. But letting inter-generational distribution be mostly a function of kinship generated its own perverse incentives and regrettable outcomes.

Yes, it induced people to breed at above the population-replacement rate. In an age of high infant mortality, that was the only way for each family to insure having sufficient hands to sustain the household economy through rough patches while increasing the likelihood that the surviving children would keep their parents from falling into abject poverty after they stopped working. But that incentive structure also helps explains why children tended to be a little lax in discharging their moral duties to their parents when they were too old to contribute to the material well-being of the extended family. I’m too lazy to dig up data about the poverty rates among senior citizens prior to Social Security and Medicare, but I recall that they were appallingly high, and much higher than the poverty rate among working-age people. That suggests that lots of working-age people either were unable or unwilling to secure their parents’ wellbeing in old age.

So it’s probably true that, as Ted observed in an earlier comment, few people love funding Social Security and Medicare. But they sure love not having gramps sleeping on the sofa bed in the den every night and not having to pay out-of-pocket for his pacemaker. And gramps sure prefers keeping his own modest condo to being dependent on his extended family, watching his son-in-law’s eyes roll whenever he tries to impart a little grandfatherly wisdom. Does Ted really believe that we were all better off when women were having seven children, one of whom didn’t survive childbirth and two of whom died of childhood diseases before they could lend a hand at harvest time? Does he really think that most households were like the one in that old Capra movie, where there was plenty of room for gramps upstairs to spend his golden years contentedly reenacting Teddy Roosevelt’s charge up San Juan Hill?

That’s why, much as I admire Mark Steyn, I get a little impatient when he portrays our present predicament as if it were principally a matter of moral corruption. You can believe that we’d all be better off measuring up to the moral standards of some crusty old British imperialist if you like. But if you really want to do something about the social problems Steyn identifies, you’ll need to devise social policies that lower the costs of having children. That means figuring out the best way to socialize the economic risks associated with childrearing--including the risk that children will need expensive medical treatment--that aren't now addressed by the private insurance market.

There are conservative and liberal ways of doing that—think of the Sam Club’s Republicans like Reihan Salam and Ross Douthat or all the people on the left thinking hard about how to minimize the inefficiencies and eliminate the perverse incentives associated with traditional command and control social policy. But it’s all social policy.